cmclaugh blog 5

My own week one blog focused on the article “What is Strategy?” by Professor Porter, so it only seems right to bookend my weekly blog’s on Strategy with another Professor Porter article written with Mark Kramer- “Creating Shared Value”.  The article claims that Shared Value has the "power to unleash the next wave go global growth and "unleash a wave of innovation". This implies that capitalism, as practiced today, in restraining both growth an innovation. Leo Szilard said that "invention is unpredictable" I believe that "innovation" is also unpredictable.

Most (many) (some) people care about clean air, water, and soil; until they don’t. Most (many) (some) companies care about clean air, water, and soil; until they don’t. Pittsburgh’s own Rachel Carson, in her book SIlent Spring, published in 1962, warned of the damage that certain agricultural chemical pesticides can have on the ecosystem. And who can forget hearing Joni Mitchell sing “Hey farmer farmer, Put away that D.D.T. now, Give me spots on my apples, But leave me the birds and the bees” in the song Big Yellow Taxi from 1970. How many people do you think care about how the apples were grown for their apple pie at Thanksgiving? I remember growing up in Massachusetts in the late 1970’s when neighbors collected signatures to get the bottle bill on the state ballot; this is when a consumer pays a deposit on certain cans and bottles upon purchase and returns the empty can/bottle to get their deposit back. This makes sense right? Then why is there so much opposition from industry and consumers? One reason is that it is costing industry money (1). There are also certain “lazy” people who can’t be inconvenienced to wash the bottles and return them. I myself am occasionally guilty of that. We have a lot of problems in this world. You might as well have called shared value, shared responsibility; I believe most people don’t want to own it.

Porter/Kramer state “In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems”. But businesses have a willing accomplice, the consumer. We don’t want chemicals dumped in our own backyard and we don’t want to see high cancer rates. We don’t want mining waste contaminating our drinking water. We don’t want to see our neighbors addicted to opiods. Then why is this happening? I believe if you choose to work in an industry that can harm the environment or harm mankind, then "you" have a responsibility/obligation (moral, ethical) to do the right thing. But by the time many people reach a leadership position at some of these companies, they have lost their moral compass, assuming they ever had one. These are not the nicest people you are ever going to meet. Who can forget “Pharma bro”, Martin Shkreli, and his Daraprim pricing model? But you can make the same claim about our senior government leadership and their lack of a moral compass.

Porter/Kramer are proposing a “better” business model or framework to improve both companies and society. If you want to have a chance to succeed in business, you are going to need to know some of the strategy theories, models, forces, analysis, templates, and frameworks. But those alone are not enough; you also need to have the people who are running these companies and making the decisions to be decent human beings.

1. Beverage Companies Embrace Recycling, Until It Costs Them, Micheal Corkey, New York Times, July 5, 2019.

Blog 4:

The mission statement of a nonprofit is akin to the strategy statement Collins and Rukstad elucidate in this week’s readings. The purpose of the mission statement to succinctly articulate the organization’s goals, who and where it serves, and how it accomplishes its mission. It serves as a compass to the board, executive staff, and employees; in some ways it serves as an advertising statement for funders. How often are the organization’s employees included in the development or refinement of the mission statement, and how are they empowered to act upon it in their daily work? Where are other stakeholders involved? 

Stakeholders from over 1,000 nonprofits were surveyed over 16 years through a nonprofit strategy course at Stanford’s Graduate School of Business. Per the Stanford Social Innovation Review, 75 percent of those organizations lacked a cohesive mission statement. The statements that were surveyed lacked “rudimentary clarity” and defined the organization’s activities and capabilities so broadly that “even a large, resource-rich organization would struggle to do them all, let alone do them with excellence.” What’s more, very few of these stakeholders felt any sort of commitment or attachment to the vaguely defined statement itself. As a result, many organizations suffer from “mission creep.” So many organizations stretch their mission so far without anyone raising an eyebrow, the SSIR writes.  Mission creep is what makes scope definition so critical. Scope definition, according to Collins and Rukstad, includes activities that are slightly different in the nonprofit, but the core concepts include clear boundary definitions that hone in on what the organization does best and the desired outputs of the strategy it puts forth. 

A key takeaway from this week’s readings for me was the importance of inclusion in the strategy development and implementation process. The company or nonprofit where the planners are different than the doers are the organizations where strategies fail, where “what gets done is different than what was planned,” HBR writes. A high level of inclusion necessitates clear articulation of the mission from leadership and creation of a culture in which everyone is empowered and accountable for organizational success. It also necessitates a change management strategy to achieve buy-in and mitigate the risk of mission derailment. 

Collis, David, and Michael Rukstad. “Can You Say What Your Strategy Is?” Harvard Business Review, August 16, 2016. https://hbr.org/2008/04/can-you-say-what-your-strategy-is.

Jonker, Kim, and William F. Meehan III. “Mission Matters Most (SSIR).” Stanford Social Innovation Review: Informing and Inspiring Leaders of Social Change. https://ssir.org/articles/entry/mission_matters_most.

Lafley, A.G, Roger L. Martin, Sally Osberg, and Nicolaj Siggelkow. “Bringing Science to the Art of Strategy.” Harvard Business Review, October 12, 2015. https://hbr.org/2012/09/bringing-science-to-the-art-of-strategy.

Blog #4 – Strategy Evaluation

The reading “Have You Tested Your Strategy?” lays down a set of wide questions to evaluate the strategy of a company. These questions are not precise to help in evaluating varied strategies with unique goals based on the industry involved. Let’s look at Disney’s strategy in launching its new streaming service Disney+.

 Disney+ has been launched with the goal of providing a one stop shop for all of Disney’s digital content. This is in alignment with multiple consumers ditching cable and another traditional forms of entertainment for digital forms due to the convenience involved and the number of options available as bundles or packages.

Test 1: Beating the Market

            Disney+ has the distinction in terms of the amount of exclusive content provided by the company. The small kids’ demographic is something that no other streaming company is targeting. Netflix, which is its main competitor focuses more on shows for adults and original content. It’s too early to tell, but even if it doesn’t cater to the widest set of audiences, Disney+ definitely has the ability to capture a significant portion of the market with it’s original content supplemented by some interesting content for adults like the Marvel and Star Wars franchise. The fact that Disney is releasing new content related to Star Wars is a compelling reason for many people to get it, due to the cultist nature of the fans of the franchise.

Test 2: True Source of Advantage

            A tried and trusted source of entertainment for kids available at a bargain price.

Test 3: Strategy Granularity

            Primary focus on content for small kids and children while not abandoning the remaining demographics by trying to utilize established classic franchises like Marvel and Star Wars

Test 4: Future Trends in Industry

            Disney owned Hulu provides an interesting perspective in terms of a cheap streaming service with ads. This could be representative of the future streaming services that are free with ads.

Test 5: Privileged Insights

            Disney was able to use Hulu to capture market share from Netflix. Part of this success is identifying that a low-cost streaming service with ads is a viable alternative to a premium service like Netflix. So, Disney definitely has detailed insights on the industry.

Test 6: Uncertainty

            This is not clear from the information available and cannot be analyzed in depth.

Test 7: Commitment and Flexibility

            Disney has chosen the right time to get involved in the streaming industry after its success with Hulu in a growing market. It has invested close to 200-300 million dollars in Disney+ and this coincides with Netflix’s licenses for Marvel movies expiring at the end of the year. Disney is testing the waters in other areas apart from entertainment for kids which may provide options in the future.

Test 8: Bias

            This question is too specific and cannot be answered meaningfully in this context.

Test 9: Conviction

            Disney has set a 5-year target of 60-90 million subscribers and is steadily improving its infrastructure to support the current number of subscribers which is more than 10 million and steadily increasing.

Test 10: Action Plan

            All the factors discussed above indicate the combined action plan for Disney to gain a strong foothold in the streaming industry.

Based on this analysis, Disney lies in the highest category of companies that have a strategy which is consistent with 7-10 tests.

Taking Strategy From Development To Implementation

This week’s readings made me realize the ways that need to be considered while taking strategy from development to implementation. They not only included tensions that need to be balanced, but also the tests that can be performed on your strategy before actually bringing up an action plan to implement it. Having worked in two startups, I experienced strategies that failed as well those succeeded. The readings helped me assess why those strategies panned out the way they did.

The first company I worked in was like Groupon of India. They started out well because they had the first mover advantage, but over a period of time, they faded away. There was no strong end goal except wanting to acquire more users. There were no specific targets and new strategies were implemented without comprehending about its granularity, if there is a true source of advantage or not, does it plan ahead on trends etc. A new product manager just joined and he tried a strategy that had worked well at his previous company. So, I felt the strategy was contaminated by some bias based on the work at his previous company. Moreover, there was no balancing act towards the four tensions. It was a top-to bottom hierarchical organization with no sense of urgency in the lower and middle working layer.

The second company I worked in was a travel-based startup with an aim to build a one tap travel journey from one point to another in India. It was a flat hierarchy (and an open office) with a clear mission of making travel easier for everyone. Everyone in the organization felt empowered. There was an inspiring end state as well as short term goals for next 3-4 months. The open culture and following agile principles in the work that we did fostered multiple opinions and productive arguments which eventually led to balancing creativity with discipline. Therefore, there was a good balance of the four tensions that Simon Horan and Michael Connerty talked about in their paper. The strategy to expand into different cities was not only granular, but it also tapped a true source of advantage by focusing on buses. Being the first to market in those cities in the buses domain, it tapped on the first mover advantage. As a consequence of the above abilities, in spite of being a 15-20 member team, it was able to expand to 10 cities over the span of a year and now, employed more than a hundred people.

Thus, the weekly readings provided me with an idea of the prerequisites that need to be taken care of in order to build a successful strategy. If the strategy is failing many of the tests, one would know that there is something that needs to be fixed before implementing it and going on full throttle.

- Deepak Chawla

References :
[i] https://hbr.org/2017/11/good-strategy-execution-requires-balancing-4-tensions
[ii] https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/have-you-tested-your-strategy-lately

Blog #4

When I first read the title “Bringing Science to the Art of Strategy” I thought this would be an article about testing different strategies. Similar to the Scientific Method, a hypothesis would be formulated, tested and some results would help determine company-wide strategy. I was surprised to discover the amount of brainstorming and filtering that is recommended before analysis is recommended.

The thing I enjoyed most about this article, was how practical it is. It is probably the most actionable article in bridging the gap between identifying an issue and collectively committing to a strategy. This is an article I will keep throughout my career and can use as a guide to lead strategy. 

One aspect of the article that stood out to me is the role of external/strategy consultants in this process. The author recommends starting internally, to build direction, save time and money, before hiring a consultant. This is opposite from what I hear in business, where consultants are called upon to help solve a problem of which there is no internal expertise or there is not enough time/human resources allocated. Understanding the need for team collaboration, filtering of ideas, and exposure to all stakeholders before a consultant is hired will be useful in my career. This will allow me to more effectively manage relationships with consultants - making sure I have completed the necessary groundwork. The 7-step methodology in the article also might empower me to petition for consulting resources one an executive has seen he traction I've made.

Finally, this scientific methodology to strategy also allows a firm to plan and schedule time. Each step can be allocated a certain time frame in order to make the process more manageable and predictable. However, the firm will need someone, ideally fro within, to manage the process from beginning to end.

Blog #4- How to implement strategies

This week’s readings were about the implementation of strategic plans. This is a pressing problem as many times companies know what to do but now how to do it. I believe the core of smoothly executing a strategy plan is focus and communication.

How to make an entire organization focused?

Many times, companies and executives are tempted to do multiple things at once without analyzing their current performance, environment, industry, and internal capabilities and expertise. This results in a poor execution of a strategy plan as there is a lack of objective and poor allocation of resources. One way to overcome this problem is by having a clear set of vision, mission, objectives, scope, and strengths. Companies and their employees should know why they are doing what they are doing and how it differentiates them from their competitors. Before implementing a plan, the company should ask themselves “Does this match with our vision and mission and help us achieve our objective in the scope defined using our strengths?”. Along with the C-level executives, all employees should be aware of these 5 components. Only then, will all the employees focus on a common objective leading to higher productivity and better results.  

How to improve communication in an organization?

Once the aforementioned 5 components are well defined, it is of utmost importance that all the employees are well aware of it. This can be achieved by improving communication within the company. One way to do this is to decentralize power enabling all employees to put forth their points and foster collaboration and creativity. By doing this, the company can encourage new ideas while empowering their employees making them more focused. It also helps in identifying gaps and problems at the grassroot level. Another way is to improve communication is to have clear cut targets. A company is unlikely to get the desired results if the expectations from a person or a task is unknown. Clear expectations and targets help in creating a route to achieve the final goal.

Headspace is an Australian nonprofit that supports youth mental health services. Their 3-year strategic plan has been summarized concisely in 1 page which makes it easy for everybody to understand and illustrates their focus areas.

[1]

[1] https://headspace.org.au/assets/Uploads/headspace-Strategic-Plan-2017-2020.pdf

Blog #4: Taking Strategy from Development to Implementation

In determining the success of a company, the effective implementation of a strategy is as important as the design of the strategy itself. This weeks' reading materials talk about critical issues to be considered in strategy implementation from different perspectives. 

Collin's article highlights the importance for executives to clearly state their strategic goals to the whole company (Collis & Rukstad, 2008). McKinsey's article provides 10 methods to test the effectiveness of a strategy (Bradley et al., 2011). The article Bringing Science to the Art of Strategy, emphasizes the need to balance rigor and innovation in strategic planning and implementation: elegant strategies require both rigorous analysis and novel hypotheses (Lafley et al., 2012). Finally, Horan and Connerty's article reminds entrepreneurs of the four tensions during strategy implementation and suggests several solutions (Horan & Connerty, 2017).

For a company, although the strategic design is necessary, its value remains mainly at the beginning of the company's development. Only in the follow-up implementation, can we continuously adjust the strategy and create real values. The 2nd tension mentioned in Horan and Connerty's article is one of the real problems often encountered by enterprises: should a large strategic reform start from top to bottom (which could bring more efficiency), or from bottom to top (which could motivate current employees)?

From my observation of several cases in technology companies, whether it is a new product launch or old product revision, the key to successful strategic transformation is to get all the people involved to deeply understand and support the strategy from the very beginning. Strategic analysts often think that their design is based on comprehensive research and reasonable assumptions. Nevertheless, it is R&D engineers, salespersons, and operation personnel who actually conduct the strategy. No matter the original strategic design comes from spontaneous employees or the strategic investment team (in most cases, the latter), if the company wants the strategy to be implemented smoothly, all participants must have a deep understanding of the optimate goal and a clear knowledge of their specific contributions to the ambitious goal. 

Google's OKR (Objectives and Key Results) management system can be used as a helpful example in this case. Through disassembling Objectives and Key results from large to small, everyone involving in the strategy implementation will have a precise sense of purpose and participation. In this way, even if there are setbacks or even failures in the early stages of strategic transformation (in fact, it is very common in technology companies), there will be no extreme consequences of human departure and organizational paralysis. Instead, everyone will be motivated to learn from the failure together and start another round of transformation attempt.

References:

David J. Collis, Michael G. Rukstad. (2008, April). Can You Say What
Your Strategy Is?. Retrieved from https://eclass.aueb.gr/modules/document/file.php/DET162/Session%201/Can%20you%20say%20what%20your%20strategy%20is.pdf.

Chris Bradley, Martin Hirt, Sven Smit. (2011, January). Have You Tested Your Strategy Lately? Retrieved from https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/have-you-tested-your-strategy-lately.

Lafley, Martin, Rivin, Siggelkow. (2012, September). Bringing Science to the Art of Strategy. Retrieved from https://hbr.org/2012/09/bringing-science-to-the-art-of-strategy.

Simon Horan, Michael Connerty. (2017, November). Good Strategy Execution Requires Balancing Four Tensions. Retrieved from https://hbr.org/2017/11/good-strategy-execution-requires-balancing-4-tensions.

Blog #4: Right implementation of strategies

Readings this week talks about probably one of the most critical aspects of effective strategy development - correct implementation. Implementation, if not done correctly, will result in a half baked strategy: which is of no use to the organization. 

While the McKinsey article talks about the ten-odd tests[1] one can use to inspect their strategy, I believe it all boils down to the fact the whether or not we asked the right questions when developing the strategy. These questions should not be kept until the very end when creating an effective plan, but we should try to answer them as early in the development process as possible[2]. Ideally, our strategy should take into account the immediate need and attributes of the customers, which we, as an organization, can solve without comprising our ideals[3]. At the same time, it should be hard for our competitors to adopt our new plan. There should always be a first movers advantage - if not, it's just not worth it. 

Let's take the example of Google+, a social media platform that Google launched in 2017 and then shut down within two years[4]. When Google first launched this, they believed that since they have such a diverse plethora of products in their lineup, a social media platform will be a perfect fit. Technologically, Google+ was a superior platform with a lot more streamlined integration as compared to Facebook. However, the strategists here still did not consider an important aspect- do customers need another platform, and will Facebook not be able to implement the same features on their's in a short time. The answer to both of these questions was a staggering no. Customers were not really bought into the idea to move to this new platform, and the neat little features that it offered - such as events, and map-based geolocation - was quickly implemented by the Facebook's team. 

To summarise my understanding from this week's readings: even though, as an organization, one has substantial disposable capital available, it's imperative to think about post-launch scenarios and tweak the product or strategy accordingly.  

References:

[1] Have You Tested Your Strategy Lately? (McKinsey Quarterly, January 2011) 

[2] Charles Roxburgh, “The use and abuse of scenarios,” mckinseyquarterly.com, November 2009.

[3] Richard Rumelt, “Strategy in a ‘structural break,’” mckinseyquarterly.com, December 2008.

[4] Talin. (2019, April 3). Why Google Failed. Retrieved from https://onezero.medium.com/why-google-failed-4b9db05b973b.

Blog #4

The issue of moving from strategy creation to execution is extremely interesting to me.  It’s the foundation of my interest in business.  One day, I looked around me and noticed that many people, perhaps even a majority, wake up everyday and go to work in a large organization.  We each have the potential to produce a lot of meaningful work that improve the world.  But when our efforts are harmoniously linked and oriented by the objective of an organization, such work can be transformative.  I think it’s really inspiring to imagine what can be accomplished by many people working together that can’t be accomplished individually.  Unfortunately, harmony is not the norm for an organization—it takes everyone puling in the right direction to be successful. 

The example from Collis and Rukstad is superb in visualizing this idea.[1]  They imagine an organization as a pile of 10,000 iron filings with each representing one employee.  If you were to simply transfer the pile to a piece of paper, the result would be a mess.  Each piece of iron would haphazardly point in a different direction.  However, if you were to place a magnet over the paper, all of the iron would literally be pulled in the same direction.  This metaphor resonates strongly with me because many companies do seem to lack strong strategic direction.  It calls to mind Collis and Rukstad’s central premise that many people cannot state the strategy of their company.  I’ve worked at places where this is true, and it leads to a lot of frustration.   If an employee doesn’t have a clear picture of the overall goal, everything becomes harder.  They have less motivation because every piece of work becomes a question of “Why am I doing this?”  The employee is also less effective because there’s no guiding light to help with tough decisions.  And since there isn’t a guiding light, a well-meaning employee might inadvertently act in a way that hurts the company because they don’t know any better.  This is where the role of the magnet comes in: It must be a pulling force that provides clarity, inspiration, and direction to all employees in the company.  Collis and Rukstad provide a framework of how to create a strategy that serves as a magnet.  The organization’s strategy must be simple enough that every employee can internalize it, and internalization must be the goal.  The strategy must literally be one which everyone can say in a way that resonates for them and others.  It must become the benchmark against which all the tough decisions are measured.

Collis and Rukstad also suggest three simple but important elements of this strategy: objective, scope, and advantage.  These elements remind me of the HBR piece from Horan about the need to balance internal tensions in executing strategy.[2]  Take the first tension, for example, “an inspiring end-state versus challenging targets.”  Even after the strategy objective is crafted, which is the inspiring end-state, every single line-manager will need to decide what are the reasonable targets to strive for in aiming for that objective.  Those decisions will still be hard, but after the organization succeeds in the vital step of internalizing the strategy from the top down, they will become much easier.  Managers will be able to ask themselves if the target is actually relevant to the objective, if it’s within scope, and if it utilizes the competitive advantage of the firm.

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[1] “Can You Say What Your Strategy Is?”

[2] “Good Strategy Execution Requires Balancing 4 Tensions”